Glucagon 1-6 was found to be a partial agonist on the glucagon-sensitive adenylate cyclase system in liver membranes. The potency was 0.001% of the native glucagon molecule. Secretin-amide 1-6 and VIP 1-7 which differ from glucagon 1-7 by having an aspartate residue instead of glutamine at residue 3, failed to interact with the glucagon receptor. It appears, therefore, that residue 3 of glucagon is necessary for selective recognition and action of glucagon. Increased potency of glucagon was obtained with increasing chain length; glucagon 1-12 is fully active with .05% of the potency of glucagon. Glucagon 13-29 is inactive and an agonist but competes with glucagon but not with glucagon 1-12 at the receptor. It is concluded that both specific recognition and activation resides in the N-terminal region whereas the C-terminal region is responsible for tight binding (or potency) of the intact hormone. We have also prepared amidinated lysyl derivatives and tryptophan derivatives of glucagon that are fully active and as potent as the native hormone.